Lost?  Check Your GPS.  Need Financial Direction?  Set a Goal and Make a Plan!

By Lila Quintiliani, AFC®
Military Saves Assistant Coordinator

If I need to find a particular place, I look it up on Google maps. Or enter it in the GPS.  Occasionally, because gadgets can get it wrong, I look at an actual paper map. The point is, I wouldn’t think of starting on a journey without at least some idea of where I was going. But that’s what millions of Americans are doing every day when it comes to their money. A new Planning and Progress study released by Northwestern Mutual last week found that a whopping 45 percent of Americans have no financial plan at all. Zip, zilch, nada. If you are one of those hapless folks, then it’s time to dig out your road map and at least figure out where you’re going.

Get Some Goals
Creating a financial plan sounds complicated, but in reality, it all starts with having an idea of what your goals are. Do you want to own a home? Do you want to go on vacation? Are you saving for your child’s education? Do you want to pay down your debt? Everyone should have a list, whether it’s on the back of their hand or in an Excel spreadsheet, of several long and short term goals. It’s much easier to achieve a specific – and realistic -- goal (“I want to save $200 a month so that I can have a down payment for a car”) than a vague goal (“I want to be rich”).

So Now What?

Now that you know where you want to go, and hopefully have a rough idea of how much money you need to get there, it’s time to figure out how exactly you’re going to do it. Do you know how much income you have each month? Do you know what all your expenses are? It’s crucial to have a handle on this so that you know how much you can afford to put toward your goals. For tips on creating a spending plan, you can check out the FINRA foundation’s website.

So Can I Go Buy My 64GB New iPad 4G LTE Already?
Well, maybe. If you’ve written down your goals, tracked your spending, and decided that you have a sufficient surplus to attain your wants, then I would still tell you to hold on a minute and go through the following checklist:

If you can answer all these questions with a “yes”, then congratulations: you are no longer wandering lost in the woods. You have a plan.